This range of New Zealand home building trade contracts allows both the contractor or home owner to protect themselves against misunderstandings.
Hiring a builder will frequently involve substantial sums of money. You should therefore take considerable care, not only in planning the building work, but also in choosing your builder and negotiating a contract.
The CONSTRUCTION CONTRACTS ACT 2002 (in force on 1 April 2003) contains important provisions dealing with progress payments and the resolution of disputes. The Act is intended mainly to address problems in the building industry of subcontractors not being paid by head contractors. But, with some exceptions, the Act also applies to homeowners contracting with builders.
Before contracting with a builder you should ask what houses he or she has worked on. If possible, contact the owners of the properties and see if they'll let you examine the builder's work.
It's also advisable to find out whether the builder is a Registered Master Builder. A Registered Master Builder will have a licence, which is renewed every two years; ask to see it. You can also contact the Registered Master Builders Federation to verify that the builder is in fact registered and has a valid membership number (phone 0800 269 119).
The RMB Federation will also refer you to particular builders in your area, taking into account your particular requirements. This referral service is free. (The 22 local Associations belong to the national Registered Master Builders Federation. The Federation operates a website at www.masterbuilder.org.nz, where you can obtain a list of Registered Master Builders in your area, and also check whether a particular builder is a Registered Master Builder.)
Clients of Registered Master Builders can obtain advice and assistance from the local RMB Association. Also, Registered Master Builders can offer a seven-year guarantee on their work. For more information, ring the local Association or visit www.masterbuilder.org.nz (under About the Guarantee).
You should get a quote for the job, not an estimate. A quote is a price that legally binds the builder; the builder is not bound by an estimate.
You should obtain quotes from several different builders â€“ don't simply go with the first quote you're given. Use the Registered Master Builders Federation's free referral service at www.masterbuilder.org.nz.
Your building agreement should suit your particular project. You don't have to use your builder's standard contract. Your Registered Master Builder can provide a range of standard contracts that will protect your interests, but only if you are building with him or her.
When entering into the contract, you should consider the following:
Your building contract cannot include a clause that says that you won't have to make a payment to the builder (whether a progress payment or full payment) unless and until you receive a payment from a third party. If that kind of clause is included, it will have no legal effect. This means that you will have no legal right to withhold the amount: you must pay it. This type of condition in building contracts is often called a "pay when paid" or "pay if paid" clause.
This rule is contained in the CONSTRUCTION CONTRACTS ACT 2002, which is in force on 1 April 2003. It's intended mainly to protect building subcontractors from non-payment by head contractors. But the rule will also apply to a contract between a homeowner and a builder.
Your local council will make periodic inspections during the building process. They will make a final inspection when the building is completed. They will then either issue a Code Compliance Certificate or notify you of things that must be corrected before the Certificate can be granted.
If you're living or intend to live in the building in question, you must make progress payments only if your contract requires this. You and your builder are free to decide on whatever method you choose for determining what progress payments you will make, including:
The rule is different for commercial construction contracts â€“ that is, if you won't be living in the property being built or modified. If a commercial contract doesn't include any rules for progress payments, the CONSTRUCTION CONTRACTS ACT 2002 sets out some default rules that apply automatically. Under these default rules, your builder will have a right to monthly progress payments, calculated on the basis of the value of the work done during the relevant month.
The reason for the different rules for residential and commercial construction contracts is that homeowners will usually not be familiar with practices in the building industry. They should therefore have to make progress payments only if they've explicitly agreed to them with the builder.
If you're legally required to make progress payments (see above), the builder will claim a progress payment by serving a "payment claim" on you. The builder will do this at the end of the month to which the payment relates, or at the time specified for this in your contract. The builder's payment claim must be in writing, and must give details about:
If the building is your home, the builder's claim must also explain to you:
This additional information for home-owners must be in the form set out in the CONSTRUCTION CONTRACTS REGULATIONS 2003 (SR 2003/30), Schedule 1, Form 1.
If you disagree, you can respond by giving the builder a written "payment schedule", stating the amount you think you should pay. You'll need to specify:
If you haven't provided the builder with a payment schedule within
you become legally liable to pay the builder's claimed amount on the due date for the progress payment.
If you then don't pay the amount by the due date, it becomes a debt that the builder can recover from you in the courts, along with legal costs.
If you do provide a payment schedule but don't pay your proposed amount by the due date for the progress payment, similarly the builder can recover your proposed amount, along with costs, in court.
In summary, if the builder makes a claim and you neither respond to it nor pay it, or if you respond with your own schedule but don't pay your proposed amount, you're legally liable for the relevant amount as a debt.
The builder cannot suspend work if it's a residential construction contract, but can suspend work if it's a commercial construction contract.
If, for example, you have a dispute about whether you're liable to make a progress payment or about the standard of work that's been done, either side can take the dispute to an adjudicator under the scheme set up under the CONSTRUCTION CONTRACTS ACT 2002. You can use this adjudication procedure even if the dispute is already being dealt with by some other court or tribunal.
If you're the one initiating the process, you do this by serving a written "notice of adjudication" on the builder. This notice must state:
If the builder is initiating the adjudication, and the building is your home, the builder's notice must also:
If the builder's notice doesn't do this, it has no legal effect. This additional information for home-owners must be in the form set out in the CONSTRUCTION CONTRACTS REGULATIONS 2003 (SR 2003/30), Schedule 1, Form 2.
You and the builder can agree between you on whom you want to decide your dispute. This person is called the "adjudicator".
If you and the builder can't agree on someone, it may be that you can agree on someone you both trust to choose an adjudicator for you. (This person whom you agree on is called a "nominating body" in the CONSTRUCTION CONTRACTS ACT 2002.)
If there's no disagreement between you but you simply can't find someone willing and able to decide the dispute, you can request an "authorised nominating authority" to choose an adjudicator. These nominating authorities will be appointed by the Government. It may be that arbitration and mediation organisations â€“ for example, the Arbitrators' and Mediators' Institute of New Zealand (AMINZ) â€“ will apply to be appointed as nominating authorities. To contact a nominating authority, you should contact the Ministry of Economic Development (check their website for information at www.med.govt.nz).
Your request to the nominating body or nominating authority must be in writing and you must give them a copy of the notice of adjudication.
Once an adjudicator has been chosen and has accepted the role, you must refer your dispute to the adjudicator within five working days of receiving the adjudicator's notice of acceptance. You do this in writing by providing the adjudicator with an "adjudication claim".
Your adjudication claim must state the nature and grounds of your dispute. You must also provide a copy of the notice of adjudication, if it is still relevant. You can also provide the adjudicator with any other documents that you think are relevant.
You must serve a copy of your adjudication claim on the builder.
The builder â€“ or you, if the builder is initiating adjudication â€“ must give the adjudicator a written response within five working days after receiving the claim, or within a further time that both sides agree on or that the adjudicator allows. The builder must give you a copy of the response and of any accompanying documents.
Adjudicators are free to adopt any procedure that they think is best. Specifically, they have the power:
The adjudication process is confidential.
You're not required to have a lawyer, but you can have one if you wish. Under the adjudication scheme, you're entitled to have someone to represent you, and this can be a lawyer or anyone else.
Each party must meet their own costs and expenses. But the adjudicator can order a party to pay costs and expenses if the adjudicator thinks that party caused them unnecessarily through bad faith or through making unfounded allegations or objections.
Adjudicators must act independently, impartially, and in a timely manner. They must deal with the dispute according to the rules of natural justice, which usually means not being biased and giving both sides a fair hearing.
In making a decision, the adjudicator will consider:
The adjudicator must make a decision within 20 working days after the deadline for the builder's response has passed (see above). But adjudicators can extend this by another 10 working days if they think it's reasonably necessary. Also, you and the builder can agree to allow the adjudicator further time.
The adjudicator will give both sides a copy of the decision. It must be in writing and give reasons.
If the adjudicator rules that you must pay an amount of money, you must pay this amount within:
If you don't pay it within this time, the builder can go to court to recover the amount from you as a debt, along with legal costs (see related article How to recover a debt from an individual). You're legally bound to pay the amount even if you've applied to the High Court for judicial review of the adjudicator's decision or if any other court proceedings to do with the dispute have begun.
If the dispute was about rights and obligations under the contract rather than a sum of money, and one party hasn't comply with the adjudicator's decision, the other party can go to court to have their rights under the contract enforced. The court will take the adjudicator's decision into account but doesn't have to follow it.
When remodelling a house or adding rooms you are likely to need to hire a contractor. By asking prospective contractors a number of questions you can find out about their reputation and level of experience, and whether they are willing to meet the standards you expect.
You should ask any prospective contractors:
When you hire a contractor, you should establish who will obtain the necessary building consents from your local council â€“ you or the contractor. Any type of construction, alteration, demolition or removals will require a building consent (see How to obtain a building consent).
You should be aware of the precise terms of the contract. In particular:
You will need to apply to your local council for a building consent if you intend to carry out any building or construction work, as defined in the BUILDING ACT 2004.
Building or construction work that requires a building consent includes the following:
You can obtain an application form from your nearest council office. You will need to pay the relevant fee.
You should also obtain a Project Information Memorandum from the council (see below), preferably before you apply for the consent.
A Project Information Memorandum provides information about the work site that may have an effect on the work, including identifying any weaknesses in the land (such as erosion or subsidence), the location of storm or sewerage systems that relate to the site, and details of the various approvals that you will need to get from the council.
You can apply for a PIM either at the same time as you apply for the building consent or before. However, it is best that you obtain a PIM in the earlier planning stages rather than waiting until after plans and drawings have been finalised.
If you apply for a building consent without applying for a PIM (either earlier or at the same time), your application for a consent will be treated as including an application for a PIM.
The council will assess your application to make sure that it complies with the New Zealand Building Code. The council may engage a specialist consultant to do this.
The council must decide within 20 working days whether or not to grant your application.
The council can, within that time limit, require you to provide it with further reasonable information to do with your application. The time limit is suspended until you give the council the information.
If the council rejects your application, it must notify you in writing, giving the reasons. If it grants your application, the building consent will allow you to carry out the building work associated with it.
You may not start the work until the consent has been granted and any other necessary approvals (such as resource consents) have been given.
The consent will lapse if you do not begin work within 12 months after the consent is granted, or within any further time that the council allows.
The council will inspect the work while it is being carried out to ensure that you are complying with the consent.
When the work is completed, you must notify the council promptly. The form for this notice should have been attached to the building consent that the council issued you.
The finished work will be inspected to make sure that it complies with the Building Code. This inspection may be carried out by the council or, if you wish, by an approved Building Certifier. If satisfied that the work does comply, the council or the Certifier will issue you with a Code Compliance Certificate.
If after an inspection the council is not satisfied that the work complies with the Building Code, the consent and other relevant requirements, it may issue you with a notice to rectify, requiring you to correct the non-complying work.
The WEATHERTIGHT HOMES RESOLUTION SERVICES ACT 2006 (the WHRS Act) provides a specialist dispute-resolution process for owners of leaky homes. The Act came into force on 1 April 2007.
The WHRS Act provides for owners of leaky homes to lodge a claim with the Weathertight Services unit at the Department of Building and Housing. Weathertight Services assesses claims and provides mediation services. If claims aren't resolved through negotiation or mediation, the Weathertight Homes Tribunal can make a binding decision. You can use the process in the Act only if your home was built or altered within the previous 10 years.
The WHRS Act replaced the Weathertight Homes Resolution Services Act 2002, and is intended to provide faster, cheaper and more independent resolution of leaky homes claims than under the process set up by the 2002 Act. The 2006 Act sets up the new Weathertight Homes Tribunal, with new measures such as preliminary conferences aimed at getting the parties who are responsible for the damage to engage in the resolution process as quickly as possible. The Act also sets up a special streamlined process for resolving lower-value claims (under $20,000). The Act also allows claims for potential damage, as well as actual damage.
Weathertight Services has a website at www.weathertightness.govt.nz, which contains more information about the processes explained below.
To be able to use the scheme in the Weathertight Homes Resolution Services Act 2006 you must meet the following eligibility criteria:
There are special rules for claims for apartments, flats, townhouses or units within multi-unit complexes. These complexes can bring a single claim under the WHRS Act: for more details see below, "Claims for multi-unit complexes".
You can claim for -
No. You can claim only if you own the property.
If you're renting a leaky home, you should raise the problem with your landlord. If your landlord doesn't fix the problem, you can take the dispute to Tenancy Services and the Tenancy Tribunal: see related articles How to: The rights and obligations of residential landlords and tenants and How to apply to the Tenancy Tribunal.
Yes, but only if your tenants are using the property mainly as a home rather than as business premises. If your tenants use the property for business purposes, you cannot claim.
Yes, you can carry out repairs before you make a claim, or at any point during the claims process.
No. If you want to, you can use other options for resolving the dispute, such as â€“
If you've made a claim under the Weathertight Homes Resolution Services Act, you can pursue a claim through the courts or the Disputes Tribunal without closing your WHRSA claim. However, you can't apply to the Weathertight Homes Tribunal while you have a case going through the courts or the Disputes Tribunal.
You're not required to have a lawyer, but you can have one if you wish.
If you want to hire a lawyer but can't afford one, Legal Aid is available: see How to obtain civil Legal Aid.
If at 1 April 2007 you had a claim going through the process set up under the 2002 Act, the effect of the new 2006 Act depends on what stage your claim was at and on what options you choose. Detailed information is available from the Weathertight Services website at www.weathertightness.govt.nz.
Claims received after 1 March 2007 are dealt with under the new Act.
There are special rules for claims for apartments, flats, townhouses or units within multi-unit complexes â€“ that is, units held under unit title, cross-lease title, or company share licence. These complexes can bring a single claim under the Weathertight Homes Resolution Services Act, and accordingly can get a single assessment report and go through a single dispute-resolution process.
There are four different types of multi-unit claim:
The owners in a multi-unit complex authorise a representative to bring the claim on their behalf, as follows â€“
You should contact Weathertight Services at the Department of Building and Housing and get an application form:
Once you've lodged a claim, Weathertight Services will make an initial assessment of whether your case meets, or could meet, the eligibility criteria (see "Who can use the weathertight homes dispute-resolution scheme?").
If your case passes this initial assessment, Weathertight Services will arrange for an expert assessor to visit your home and make a report.
You'll need to choose which of two different kinds of assessments you should get. A Weathertight Services claims advisor can help you decide which is better for your claim.
If you choose an eligibility assessment, this doesn't stop you later asking for a full assessment before you go on to the resolution process (unless you've already repaired the property by then).
The assessor's report then goes to Weathertight Services to confirm whether or not your claim meets the eligibility criteria.
If the assessor's view was that your claim is ineligible, you have 20 working days to make submissions to Weathertight Services before it makes a final decision about your eligibility.
If Weathertight Services decides your claim is not eligible, you can appeal its decision to the chairperson of the Weathertight Homes Tribunal.
If after an assessment Weathertight Services confirms that you're eligible, the particular resolution process will depend on the value of your claim:
These are explained in more detail below.
If your repair costs (actual or estimated) are $20,000 or less, you can apply for Weathertight Services to provide you with access to negotiation and mediation services to try to resolve your claim.
Negotiation is an informal discussion between all the parties aimed at resolving the dispute. Weathertight Services will arrange the meeting, but you the claimant will chair it.
If negotiation doesn't resolve the dispute, Weathertight Services will arrange mediation. They will provide a professional mediator to run the mediation session. The mediator is neutral: his or her role is to help you and the other parties come to an agreement. The mediator does not make any decisions about the claim.
If mediation doesn't resolve the dispute, you can apply to the Weathertight Homes Tribunal to make a decision on your claim. They will do this "on the papers", which means they'll decide on the basis of all the relevant documents, without holding a hearing. The Tribunal is required under the WHRS Act to make the process much faster, simpler and cheaper than when it decides a standard claim (see below), minimising the amount of evidence and the involvement of lawyers, and using informal means as much as possible to resolve the dispute.
You can get more information about applying to the Weathertight Homes Tribunal from the Tribunal's website at www.justice.govt.nz/wht.
If your repair costs (actual or estimated) are more than $20,000, you can apply to the Weathertight Homes Tribunal to make a decision on the claim. There is a $400 fee for applying to the Tribunal.
The Tribunal is supported by Ministry of Justice staff, not by the Department of Building and Housing. Therefore, once you apply to the Tribunal, your claim will be handled by a Ministry of Justice case manager, rather than by a Weathertight Services claims advisor.
A single member of the Tribunal will deal with and decide your claim.
The process will have these stages:
It's an offence to disobey an order or direction made by the Tribunal, or to fail to turn up if the Tribunal has summonsed you as a witness. The penalty is a fine of up to $2,000.
You can appeal the Tribunal's decision to the courts on any issue of law or fact. You appeal to:
You must file your appeal with the court within 20 working days after the Tribunal's decision, or within any longer time that the court allows.
If you've reached a written agreement through negotiation, you can enforce this in the District Court only if a Weathertight Services mediator signs a statutory declaration.
This binds all the parties who agreed to it and can be enforced in the District Court.
The Tribunal's decision has the same effect as a District Court order, and can be enforced like any other court order.
Letter to builder outlining details of work required, estimates, who will carry out the work, a time frame, payment and a certificate of completion. Suitable for use throughout New Zealand.
A very simple contract for a general builder to use for every domestic or business client. Very easy to use. Helps to protect against claims and get money in.
This construction sub-contract is for a builder to buy and use for any small works project. Suitable for a deal with a one man sub-contractor or a large company providing a specialised service. Suitable for use throughout New Zealand.
A straight forward small works construction contract for a building company employing staff for domestic and industrial work. It helps to protect against claims and settle the invoice. Suitable for use throughout New Zealand.
This straight forward small works construction contract is for a construction client, not contractor. Use for work at your home, office or factory. Suitable for use throughout New Zealand.
Simple contract for self employed domestic carpet fitter. You may work in your own name or through your company. It is assumed that the work will be basic fitting of carpets and other soft floor coverings. Suitable for anyone, throughout New Zealand.
Letter to builder stating that his work has caused other damage. Explains the builder has breached the contract and that he will have to pay compensation. Suitable for anyone, throughout New Zealand.
Letter to builder complaining that work is not finished to standard and that he must finish it free of charge, or pay for the cost of completion. Indicates possibility of legal action. Suitable for anyone, throughout New Zealand.
Simple form of contract for an electrician to use for every domestic or business client. Very easy to use. Helps to protect against claims and settle the invoice. Suitable for anyone, throughout New Zealand.
Simple form of contract for a glazier to use for every domestic or business client. Very easy to use. Helps to protect against claims and settle the invoice. Suitable for use throughout New Zealand.
Simple form of contract for a joiner or carpenter to use for every domestic or business client. Very easy to use. Helps to protect against claims and settling the invoice. Suitable for use throughout New Zealand.
Simple form of contract for a kitchen fitter working (labour only) in the home or office of client. You may work in your own name or through your New Zealand company.
Landlord's terms and conditions document to use with all contractors for maintenance of the property. Suitable for use throughout New Zealand.
Simple contract for self employed gardener or tree and landscape contractor. Work in your own name or through your New Zealand company.
Simple form of contract for a painter and decorator to use for every domestic or business client. Very easy to use. Helps to protect against claims and settling the invoice. Suitable for use throughout New Zealand.
Simple form of contract for a plasterer to use for every domestic or business client. Very easy to use. Helps to protect against claims and settling the invoice. Suitable for use throughout New Zealand.
Simple form of plumber contract for a plumber to use for every domestic or small business client. Very easy to use. Helps to protect against claims and settling the invoice. Suitable for use throughout New Zealand.
Simple form of contract for a roofer to use for every domestic or business client. Very easy to use. Helps to protect against claims and settling the invoice. Suitable for use throughout New Zealand.
Simple form of contract for a tiler to use for every domestic or business client. Very easy to use. Helps to protect against claims and settling the invoice. Suitable for use throughout New Zealand.
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